Best Rewards Credit Cards - Travel? Cash Back? Not Worth It?

[gipsygrrl]

I'm shopping rewards credit cards and feel overwhelmed. We put 1-2k on a credit card per month and pay it off right away (I put our daycare tuition on it plus other business-related charges for my very small business). I've had a Southwest card for years, but we've recently moved and are finding that Southwest flights aren't our best travel option anymore. We don't travel a TON, but get in at least 2-3 family trips/year (with 3 people), sometimes more. I'm considering the Chase Sapphire Preferred... but maybe it makes sense with our small amount of travel to do a cash back card. I don't know if I love the idea of shifting ALL of our spending to this credit card though - like groceries and the like. Another thing to consider is that I can write off the card fee as a business expense, so I'm not hugely worried about the fee amounts. Any thoughts or recommendations? Thank you!

[kpd905]

The CSP can be a cash back card, you can always cash out the points for 1 cent each.  It is not the best value, but it is available.  This means if you just do the sign up bonus you'll get $590 after spending $4k and adding an authorized user, or 14.75% back on your spending.

I open up new cards to hit sign up bonuses for our daycare spending.  Bank of America Premium card will get you $500 after spending $3k (but has $95 fee), plus reimburse you for getting TSA pre-check or Global Entry, and reimburse $100 per calendar year in airline fees (you can buy a $100 American Airlines gift card for free).  Ignoring the Global Entry, I should end up getting $620 for spending $3,000, or 20.6% back on both of those cards (his and hers).

If you have an actual business, go for the Chase Ink Preferred before the CSP.  You'll get 80,000 points after spending $5k in 3 months.

[NorCal]

Cashback cards are typically a better deal unless you do a LOT of travel.  Road warriors can do well playing the points games, but most people are better off with cash back.  I'm guessing you'd be better off with cash-back. 

I do optimize my cash back rewards, although the added value of doing so is pretty minimal.  I used to work at a Credit Card company, so some of the culture rubbed off on me.  The best balance of value for work is getting a 1.5% cash back card.  There's a number of these from different issuers.

Since I personally go a bit crazy, here's what we use as a family:

1. Chase Freedom with rotating 5% cash back categories. 
2. AMEX Blue for 3% back on groceries (we spend a lot on groceries)
3. Costco Visa for 4% back on gas + 3% on travel and restaurants (this is better than most airline cards) and 2% back at Costco (We also spend a lot at Costco)
4. USAA Visa with 1.5% cash back for everything else.

I haven't done the math in a while, but I think we net around 2.5% cash-back.

[Revelry]

I agree with kpd905 and NorCal with the exception that 2% cashback should be your base for spending, not 1.5%.  Fidelity Visa, Citi Double Cash, PenFed, Alliant, State Dept. FCU, PSECU, etc. all offer no-annual fee 2% cards with minimal requirements.  If you bank with BofA/ML/ME the Premium Rewards or Travel Rewards can be >2% as well.

[NoStacheOhio]

2. AMEX Blue for 3% back on groceries (we spend a lot on groceries)

+1

I've had Blue since they launched it, and we actually have the Everyday (free) and the Preferred ($75/yr, but 6% back on groceries). We really like it.

We have the Chase Freedom unlimited as well (1.5% on everything). Considering switching to the Fidelity Visa, but I don't really feel like closing/opening cards right now.

[Pizzabrewer]

Yes it's definitely worth it!

Here's what I recommend:

1)  Get the Chase Sapphire Preferred.  I got one and recently redeemed the bonus + accumulated cash back for $602 in cash.  With your monthly spend it'll be easy to hit the required spending amount.

2)  Get the Discover IT card.  No signup bonus but very generous cash back.  At the end of the first year they will pay you a "match" of all bonuses earned.  So a minimum of 2% on all purchases **BUT** they have rotating 5% categories which is effectively 10% with the match.  Right now the 5% is grocery stores.  We recently got our bonus match of almost $500 so we've gotten ~$1000 from them in the past year.

3)  After you've gotten your CSP bonus, get the AmEx Blue Cash Preferred.  $250 signup bonus, 6% back on groceries (so you might want to wait until the Discover 10% groceries expires at the end of June).  Yes there's a $95 annual fee but it doesn't take much grocery shopping to cover that.

4)  Somewhere along the way consider the Chase Freedom.  Smaller signup bonus ($150 I think) but it also has rotating 5% categories.  Right now it is also grocery stores, it is rare that they line up with Discover.  It's nice when one of them is gas stations while the other is groceries, or wholesale clubs, etc.

Yes it takes some juggling but the rewards are worth it.  We've earned a few thousand $$ in the past 15 months since we started doing this.

[YttriumNitrate]

The only ones I do are Fidelity's 2% Visa (formerly Amex) card and a Southwest card every now and then. In the past, I tried the ones with more rules (groceries, gas, etc.) but the added complexity just wasn't worth it for me.

That reminds me, I need to cancel my Southwest card to start the clock ticking again to when I can signup again and get the signup bonus.

[ducky19]

I like the Delta cards - we've taken two trips with the whole family from churning the different options and have another one slated for May! The Gold Business card has a great offer right now, and won't impact your 5/24 with Chase.

https://forum.mrmoneymustache.com/reader-recommendations/delta-business-offer-is-back!-60-000-miles!/

[Inaya]

2)  Get the Discover IT card.  No signup bonus but very generous cash back.  At the end of the first year they will pay you a "match" of all bonuses earned.  So a minimum of 2% on all purchases **BUT** they have rotating 5% categories which is effectively 10% with the match.  Right now the 5% is grocery stores.  We recently got our bonus match of almost $500 so we've gotten ~$1000 from them in the past year.

The match also applies to referral bonuses (I just happen to have one in my sigline), special offers (for instance, for a while they had 10% cash back on all ApplePay purchases, so that was effectively 20% for those still in their first year), and their shopping portal. It also applies to Amazon purchases, including gift cards--and Q4 is always Amazon. IMy match on my first year was ~$500, then another ~$800 the next year on my husband's card. It's still my primary card, even though it's 1% for non-quarterly-category purchases.

I also have Amex Blue Preferred (just got an e-mail offer to upgrade from the basic card for $250 after $2000 spend, so I took advantage of that) for groceries. I was using the CSR as an "emergency Visa" for places that don't accept Discover or AmEx (which is pretty rare these days), but I cancelled after my first year to avoid the fee, so now I use the Bank of America Premium Rewards (which kpd905 mentioned earlier).

[Revelry]

... Another thing to consider is that I can write off the card fee as a business expense, so I'm not hugely worried about the fee amounts...

Do you have a business / are you willing to sign up for business cards?
Are you willing to juggle multiple cards for the benefits or to maximize category multipliers?
Your individual credit score, age of accounts, and all those things also factor in to any specific advice.

Different banks have rules to discourage bonus-seekers and those who appear to be a high risk.  Chase is the obvious example.

But most importantly, before you go signing up for cards, figure out where you want to visit.  Where do you want to stay while there?  What airlines have good service?  Then figure out if points in whatever program will let you take that vacation for cheaper.

[TheWifeHalf]

Years ago we discovered that opting for gift cards was a better deal that 'cash back.' They seemed to have at least 100 different gift cards, many places that we went to anyways.
We use our credit card for any purchase we can, our monthly total $3000 - $5000

[gipsygrrl]

Hey thanks for all of the good suggestions - this is helpful. It's sounding like cash back may be the way to go.

I have excellent credit and should (I fancy) quality for most cards :) I'm self-employed with a DBA... I file a Schedule C and claim business expenses, so I *think* I'd quality for a business card? But I'm not sure if that's how it all works or if a business card would be more beneficial for me. I'm pretty small potatoes in terms of business expenses and income. We mostly put 1k in daycare fees on the card per month. Our other large monthly expense is groceries ($700/mo.), which I currently don't put on a card but should maybe think about. The rotating category thing seems like a lot to keep up with - I'm not sure I'd be able to stay on top of that!